When Leggings Got Lucrative - The Rise Of The Athleisure Phenomenon

n 2013 they called it a fad. In 2014 they, again, said it would be a fad. In 2015 it was the fashion trend of the year, and momentum shows no sign of slowing. As London and Milan gear up for their annual September-end fashion weeks, 'athleisure' again looks set to feature on the runway as a designer and consumer favourite.

Scilla Huang Sun
Dr Scilla Huang Sun is head of equities and portfolio manager of the JB Luxury Brands Fund at GAM.

Scilla Huang Sun, Head of Equities at GAM, looks into the fashion trend that has gone from fad to staple, shaping the strategies of both high-end and high-street brands.

In 2013 they called it a fad. In 2014 they, again, said it would be a fad. In 2015 it was the fashion trend of the year, and momentum shows no sign of slowing. As London and Milan gear up for their annual September-end fashion weeks, 'athleisure' again looks set to feature on the runway as a designer and consumer favourite.

The catch-all term covers sports-influenced day wear that combines comfort with style. While power dressing was the iconic look of the 80s, portraying success and affluence through sharp shoulders and shiny shoes, the 'dress to impress' motto has evolved into a hybrid of tasteful colour palettes, high-performance stretch and clever drapery, allowing rising stars to seamlessly flow from gym to boardroom to juice bar all in one go-anywhere look.

Lifestyle look

The athleisure phenomenon perfectly captures the shift from exercise and healthy eating being a hobby to it becoming a lifestyle. Wellness is big business, and brands are aware that they needn't be shoehorned into one segment of a consumer's life - providing only work wear, evening wear or sports kit. Consumers no longer want their lives to be so compartmentalised, and the rise of digitalisation has allowed work to go anywhere, friends to see all and general life boundaries to become more blurred as you order a take away from your phone while simultaneously Skyping a client in South America. They also want to look good while they work out - be gone the baggy t-shirt!

Global scope

Far from reaching only the middle class West, demand for the athleisure concept has spread globally. In China, the government is spearheading campaigns to encourage people to do more sport in order to counter diet-related health problems that are widespread across the populous. And as generation millennial - the 18-35 year olds famous for not investing in anything - starts to flex its purchasing power, it's clear that health and wellbeing is one area that they are prepared to pour some cash into.

Millennial appeal

The tie up between athleisure and millennials is producing two interesting outcomes. First, it is encouraging them to spend on premium brands that they typically would not shop at. For example, while they might not consider a Fendi Peekaboo bag at over £3,000, the brand's stylish sportswear is selling fast on Net-a-Porter at price points under £300. Similarly, while Calvin Klein was all the rage in the 80s and 90s with high-profile campaigns fronted by Kate Moss and Brooke Shields, the brand is using a combination of revamped sports basics and the fresh faces of Justin Bieber and Kendall Jenner to appeal to a new generation of buyers. For these companies, building awareness among the millennial generation helps to cement brand loyalty for the long term, so as their income increases they consider labels' higher price point offerings.

At the other end of the spectrum are the high-street names keen to profit from the trend. H&M has led the way with innovative tie-ups with elite designers to offer consumers a slice of luxe at an everyday price point. With customers queuing round the block to snap up limited collections from the likes of Isabel Marant and Karl Lagerfeld, athleisure has proved a popular bridge between the two ends of the fashion spectrum.

Value beyond the look

From a consumer perspective, the trend has lived up to the hype and has considerably further to run. But from an investment side, the market leaders will be the brands that continue to break boundaries and constantly innovate to offer added value. Looking good at the gym is one thing, but buying into the lifestyle is quite another.

Nike has extended its offering to include training apps, free in-store classes, running clubs and Spotify playlists - infiltrating numerous aspects of customer life. Coining the hash tag #BetterForIt, the brand has also launched advertising campaigns featuring real women (rather than supermodels and sports stars) and is looking to grow sales by 40% (up to USD 7 billion) in 2017. Close rival Adidas has also invested heavily in appealing to the female market by tying up with high-end designer Stella McCartney to deliver form-flattering sportswear that actually makes you want to hit the gym and not die of embarrassment if you cross paths with a colleague during a lunchtime workout.

Nasdaq-listed Lululemon Athletica has had a strong year (up 24% on the year to 31 August) as it expands its aspirational empire, building customer loyalty through heavily Instagrammed community initiatives, including free open-air classes and motivational talks. This kind of complete lifestyle offering overshadows more simplistic collections from the likes of Topshop, which has teamed up with Beyoncé to sell her Ivy Park range. Whether the singer's name alone will be enough to drive long-term demand remains to be seen.

Hype versus hard numbers

What is sent down the catwalk at the 2016 fashion weeks may well provide a fresh flurry of headlines for the athleisure market, but constant innovation and consumer investment is what will take it from trend to mainstream revenue generator. While buying the kit is one thing, maintaining an upward stock price trajectory is quite another. Vigilance is key, and smart investors are separating the hype from the hard fundamentals.